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Exhibit 10.12
ASSIGNMENT AGREEMENT
THIS ASSIGNMENT AGREEMENT (this " Agreement "), is made on November ___, 2007, (the “
Effective Date ”) STARAIM ENTERPIRSES LTD. , a limited liability Company duly incorporated and validly
existing under the laws of the Republic of Cyprus (the " Assignor "), and XENTENIAL HOLDINGS LTD.,
a limited liability Company duly incorporated and validly existing under the laws of the Republic of Cyprus (the “
Assignee ”).
WHEREAS , Assignor is the legal and beneficial owner of that certain convertible debenture of Smartire
Systems, Inc., a company existing under the laws of the Yukon Territory (the “ Company ”) held by the Assignor
in the face amount of $2,000,000 under which there remains an outstanding principal balance of $1,770,000
plus outstanding and accrued attached hereto as Exhibit A (the “ Debenture ”) and that certain warrant to
purchase four million one hundred sixty two thousand five hundred (4,162,500) shares of the Company attached
hereto as Exhibit B (the “ Warrant ”), which was acquired by the Assignor pursuant to the Amended and
Restated Securities Purchase Agreement (“ SPA ”) between the Company and Assignor, dated December 30,
2005;
WHEREAS , Assignor desires to assign to Assignee and Assignee desires to accept such assignment
from Assignor of the Debenture and Warrant and its rights as a holder of the Debenture and the Warrant as well
as all of Assignor’s rights and obligations pursuant to the all of the transaction documents issued in connection
with the SPA and the Debenture including but not limited to the Amended Registration Rights Agreement
between the Company and Assignor, dated December 30, 2005 (the “ RRA ”), and the Amended and Restated
Irrevocable Transfer Agent Instructions between the Company and Assignor, dated December 30, 2005 (the “
ITAI ”) (collectively the SPA, CD, Warrant, RRA, and ITAI shall be referred to as the “ Transaction Documents
”) on the basis of the representations, warranties and agreements contained in this Agreement, and upon the terms
but subject to the conditions set forth herein; and
NOW, THEREFORE , in consideration of the foregoing and for other good and valuable consideration,
the adequacy of which is hereby acknowledged, the parties hereto agree as follows:
1) Assignment . For the purchase price as set forth on Schedule I attached hereto, the Assignor
hereby absolutely, irrevocably and unconditionally sells, assigns, conveys, contributes and transfers to the
Assignee the Debenture and the Warrant as set forth on Schedule I and all of its rights and benefits thereunder
and conferred therein as well as all of the Assignor’s rights, obligations and benefits under the SPA, RRA and
ITAI and the Assignee accepts such assignment as of the date hereof.
This assignment is made free and clear of any and all claims, liens, demands, restrictions or encumbrances of any
kind whatsoever.
2 ) Delivery of Debenture and Warrant, Closing . The assignment and transfer of the
Debenture and Warrant as herein contemplated and all actions required to be completed hereunder shall take
place on a date hereof (the “ Closing Date ”). On the Closing Date the Assignee shall pay to the Assignor the full
Purchase Price in immediately available funds in US Dollars and upon receipt of the Purchase Price the Assignor
shall deliver to the Assignee the Debenture and Warrant which are the subject of this Agreement duly endorsed
for transfer to the Assignor.
3) Additional Documents . The Assignor and the Company agree to take such further action and
to execute and deliver, or cause to be executed and delivered, any and all other documents which are, in the
opinion of the Assignee or its counsel, necessary to carry out the terms and conditions of this Assignment.
4) Effective Date and Counterpart Signature . This Agreement shall be effective as of the
Closing Date. This Agreement, and acceptance of same, may be executed in one or more counterparts, each of
which shall be deemed an original, but all of which together shall constitute one and the same
instrument. Confirmation of execution by telex or by telecopy or telefax of a facsimile signature page shall be
binding upon that party so confirming.
5) Representations and Warranties of the Assignor.
The Assignor hereby warrants and represents as follows:
a) Organization; Authority The Assignor is an entity duly organized, validly existing and in
good standing under the laws of the jurisdiction of its organization with full right, corporate, partnership or other
applicable power and authority to enter into and to consummate the transactions contemplated by this Agreement
and otherwise to carry out its obligations thereunder; and the execution, delivery and performance by the
Assignor of the transactions contemplated by this Agreement have been duly authorized by all necessary
corporate, partnership or similar action on the part of the Assignor. This Agreement, when executed and
delivered by the Assignor, will constitute a valid and legally binding obligation of the Assignor, enforceable against
the Assignor in accordance with its terms, except (a) as limited by applicable bankruptcy , insolvency,
reorganization, moratorium, fraudulent conveyance, and any other laws of general application affecting
enforcement of creditors’ rights generally, (b) as limited by laws relating to the availability of specific
performance, injunctive relief, or other equitable remedies, or (c) to the extent the indemnification provisions
contained herein may be limited by federal or state securities laws.
b) Ownership of Debenture and Warrant. Assignor is the sole owner and holder of the
Debenture and Warrant to be transferred hereby. There are no liens, claims or encumbrances affecting any of the
Debenture and Warrant except with respect to restrictions on the further transfer of the Debenture and Warrant
as may be imposed by the Securities Act of 1933, as amended. The Debenture and Warrant have been held by
the Assignor exclusively since their acquisition and the Assignor has not pledged or created any lien with respect
to the Debenture and Warrant during the term of its ownership.
c) Consents . No authorization, consent, approval or other order of, or declaration to or
filing with, any governmental agency or body or other person is required for the valid authorization, execution,
delivery and performance by the Assignor of this Agreement and the consummation of the transactions
contemplated hereby.
6) Representations and Warranties of the Assignee .
a) Organization; Authority . The Assignee, if not a natural person, is an entity duly organized,
validly existing and in good standing under the laws of the jurisdiction of its organization with full right, corporate,
partnership or other applicable power and authority to enter into and to consummate the transactions
contemplated by this Agreement and otherwise to carry out its obligations thereunder, and the execution, delivery
and performance by the Assignee of the transactions contemplated by this Agreement have been duly authorized
by all necessary corporate or similar action on the part of the Assignee. This Agreement, when executed and
delivered by the Assignee, will constitute a valid and legally binding obligation of the Assignee, enforceable
against the Assignee in accordance with its terms, except (a) as limited by applicable bankruptcy, insolvency,
reorganization, moratorium, fraudulent conveyance, and any other laws of general application affecting
enforcement of creditors’ rights generally, (b) as limited by laws relating to the availability of specific
performance, injunctive relief, or other equitable remedies, or (c) to the extent the indemnification provisions
contained herein may be limited by federal or state securities laws.
b) Investment Intent . The Assignee is acquiring the Debenture and the Warrant for investment
for his own account, not as a nominee or agent, and not with a view to, or for sale in connection with, any
distribution, resale or public offering of such Warrants or any part thereof in violation of the United States
Securities and Exchange Act of 1933, as amended (“ Securities Act ”). The Assignee does not presently have
any contract, undertaking, agreement or arrangement with any entity, organization or individual (each a “ Person
”) to sell, tansfer or grant participations to any Person with respect to the Debenture and the Warrant.
c) General Solicitation . The Assignee is not accepting such Assignment as a result of any
advertisement, article, notice or other communication regarding the Warrants published in any newspaper,
magazine or similar media or broadcast over television or radio or presented at any seminar or any other general
solicitation or general advertisement.
d) Consents . No authorization, consent, approval or other order of, or declaration to or filing
with, any governmental agency or body or other person is required for the valid authorization, execution, delivery
and performance by the Assignor of this Agreement and the consummation of the transactions contemplated
hereby.
e) The Assignee hereby acknowledges that the Debenture and the Warrant, and the shares
issuable there under, may only be disposed of in compliance with United States Federal and State Securities
Laws. The Assignee further acknowledges that in connection with any transfer of the Debenture and Warrant
subsequent to the date hereof and other than pursuant to an effective registration statement, the Company and/or
the Company’s transfer agent may require an opinion of counsel, the form and substance of which opinion shall
be reasonably satisfactory to the Company and/or the Company’s transfer agent, as applicable.
f) Stop Transfer Notices . The Assignee agrees that, in order to ensure compliance with the
restrictions referred to herein, appropriate “ stop transfer ” instructions may be issued to the Company’s transfer
agent.
7 ) Governing Law; Submission to Jurisdiction . THIS AGREEMENT SHALL BE
GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW
JERSEY, WITHOUT REGARD TO CONFLICT OF LAW PRINCIPLES. EACH PARTY AGREES THAT
ANY ACTION OR PROCEEDING ARISING OUT OF OR RELATING IN ANY WAY TO THIS
AGREEMENT SHALL BE BROUGHT IN A U.S. FEDERAL OR STATE COURT OF COMPETENT
JURISDICTION SITTING IN THE HUDSON COUNTY, IN THE STATE OF NEW JERSEY. EACH
PARTY HEREBY IRREVOCABLY AND UNCONDITIONALLY CONSENTS TO THE JURISDICTION
OF SUCH COURT AND HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVES ANY
DEFENSE OF AN INCONVENIENT FORUM OR A LACK OF PERSONAL JURISDICTION TO THE
MAINTENANCE OF ANY ACTION OR PROCEEDING AND ANY RIGHT OF JURISDICTION OR
VENUE ON ACCOUNT OF THE PLACE OF RESIDENCE OR DOMICILE OF ANY PARTY
HERETO. EACH PARTY HEREBY IRREVOCABLY WAIVES ANY RIGHT IT MAY HAVE, AND
AGREES NOT TO REQUEST, A JURY TRIAL FOR THE ADJUDICATION OF ANY DISPUTE
HEREUNDER OR IN CONNECTION WITH OR ARISING OUT OF THIS AGREEMENT OR ANY
TRANSACTION CONTEMPLATED HEREBY.
8) Amendments . No provision hereof may be waived or modified other than by an instrument in
writing signed by the party against whom enforcement is sought.
9) Severability . If any provision of this Agreement shall be invalid or unenforceable in any
jurisdiction, such invalidity or unenforceability shall not affect the validity or enforceability of the remainder of this
Agreement in that jurisdiction or the validity or enforceability of any provision of this Agreement in any other
jurisdiction.
10) Waiver and Consent . The Company hereby waives compliance with 2(f) of the SPA and
Section 7 of the Warrant in connection with this Agreement and consents to the assignment of the Debenture and
Warrant and all rights and interests that the Assignor has under the Transaction Documents from the Assignor to
the Assignee.
[SIGNATURE PAGE TO IMMEDIATELY FOLLOW]
IN WITNESS WHEREOF , the parties hereto have executed this Agreement the day and year
first above written.
ASSIGNOR
STARAIM ENTERPIRSES LTD.
By: /s/Nairy Merheje
Name: Nairy Merheje
Title: Director
By:
Name:
Title: Director
ASSIGNEE
XENTENIAL HOLDINGS LTD.
By: /s/Nairy Merheje
Name: Nairy Merheje
Title: Director
By:
Name:
Title: Director
COMPANY
SMARTIRE SYSTEMS INC.
By: /s/Jeff Finkelstein
Name: Jeff Finkelstein
Title: Chief Financial Officer
SCHEDULE I
Convertible
Assignee Name Company Name Warrant Purchase Price
Debenture
Warrant No. 001
Debenture No.3 Dated December 30,
Xentential Holdings,
Smartire Systems Inc. Dated December 30, 2005 $1,770,000
Ltd.
2005 Warrant Shares
4,162,500
Exhibit A
SMARTIRE SYSTEMS INC.
IInterest on Convertible Debentures
Nov 30,
2007
Interest Number Total
Gross rate per of days # of
Proceeds Date annum in the year days TOTAL
USD From To USD
2,000,000 June 23 05 Sept 19 2007 10% 360 806 447,778
1,885,000 Sept 20 07 Sept 28 2007 10% 360 8 4,189
Sept 28
1,770,000 2007 November 30 2007 10% 360 64 31,467
Interest paid ($1M
allocated to $30M) Oct 2005 (66,667)
416,767
Exhibit B
WARRANT
THE SECURITIES REPRESENTED BY THIS WARRANT HAVE NOT BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933, AS AMENDED, OR APPLICABLE STATE SECURITIES
LAWS. THE SECURITIES HAVE BEEN ACQUIRED FOR INVESTMENT AND MAY NOT BE
OFFERED FOR SALE, SOLD, TRANSFERRED OR ASSIGNED IN THE ABSENCE OF AN
EFFECTIVE REGISTRATION STATEMENT FOR THE SECURITIES UNDER THE SECURITIES ACT
OF 1933, AS AMENDED, OR APPLICABLE STATE SECURITIES LAWS, OR AN OPINION OF
COUNSEL IN A FORM REASONABLY SATISFACTORY TO THE ISSUER THAT REGISTRATION IS
NOT REQUIRED UNDER SAID ACT OR APPLICABLE STATE SECURITIES LAWS OR UNLESS
SOLD PURSUANT TO RULE 144 UNDER SAID ACT. NOTWITHSTANDING THE FOREGOING,
THIS WARRANT MAY BE PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN ACCOUNT.
SMARTIRE SYSTEMS INC.
AMENDED AND RESTATED
Warrant to Purchase Common Stock
Warrant No.: 001 Number of Shares: 4,162,500
Date of Issuance: December _, 2005
Smartire Systems Inc., a corporation organized and existing under the laws of the Yukon Territory (the “
Company ”) , hereby certifies that, for Ten United States Dollars ($10.00) and other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, Staraim Enterprises Limited
(“Staraim”), a corporation organized under the laws of Cyprus, the registered holder hereof or its permitted
assigns, is entitled, subject to the terms set forth below, to purchase from the Company upon surrender of this
Warrant, at any time or times on or after the date hereof, but not after 11:59 P.M. Eastern Time on the Expiration
Date (as defined herein) four million one hundred sixty two thousand five hundred sixty six (4,162,500) fully
paid and nonassessable shares of Common Stock (as defined herein) of the Company (the “ Warrant Shares ”)
at the exercise price per share provided in Section 1(b) below or as subsequently adjusted; provided, however,
that in no event shall the holder be entitled to exercise this Warrant for a number of Warrant Shares in excess of
that number of Warrant Shares which, upon giving effect to such exercise, would cause the aggregate number of
shares of Common Stock beneficially owned by the holder and its affiliates to exceed 4.99% of the outstanding
shares of the Common Stock following such exercise, except within sixty (60) days of the Expiration Date. For
purposes of the foregoing proviso, the aggregate number of shares of Common Stock beneficially owned by the
holder and its affiliates shall include the number of shares of Common Stock issuable upon exercise of this
Warrant with respect to which the determination of such proviso is being made, but shall exclude shares of
Common Stock which would be issuable upon (i) exercise of the remaining, unexercised Warrants beneficially
owned by the holder and its affiliates and (ii) exercise or conversion of the unexercised or unconverted portion of
any other securities of the Company beneficially owned by the holder and its affiliates (including, without
limitation, any convertible notes or preferred stock) subject to a limitation on conversion or exercise analogous to
the limitation contained herein. Except as set forth in the preceding sentence, for purposes of this paragraph,
beneficial ownership shall be calculated in accordance with Section 13(d) of the Securities Exchange Act of
1934, as amended. For purposes of this Warrant, in determining the number of outstanding shares of Common
Stock a holder may rely on the number of outstanding shares of Common Stock as reflected in (1) the
Company’s most recent Form 10-QSB or Form 10-KSB, as the case may be, (2) a more recent public
announcement by the Company or (3) any other notice by the Company or its transfer agent setting forth the
number of shares of Common Stock outstanding. Upon the written request of any holder, the Company shall
promptly, but in no event later than one (1) Business Day following the receipt of such notice, confirm in writing
to any such holder the number of shares of Common Stock then outstanding. In any case, the number of
outstanding shares of Common Stock shall be determined after giving effect to the exercise of Warrants (as
defined below) by such holder and its affiliates since the date as of which such number of outstanding shares of
Common Stock was reported.
Section 1.
(a) This Warrant is the common stock purchase warrant (the “ Warrant ”) issued in
connection with an amended and restated convertible debenture dated December _, 2005 by and between the
Company and Staraim (the “ Convertible Debenture ”).
(b) Definitions . The following words and terms as used in this Warrant shall have
the following meanings:
(i) “ Approved Stock Plan ” means any employee benefit plan which has
been approved by the Board of Directors of the Company, pursuant to which the Company’s securities may be
issued to any employee, officer or director for services provided to the Company.
(ii) “ Business Day ” means any day other than Saturday, Sunday or other
day on which commercial banks in the City of New York are authorized or required by law to remain closed.
(iii) “ Closing Bid Price ” means the closing bid price of Common Stock as
quoted on the Principal Market (as reported by Bloomberg Financial Markets (“ Bloomberg ”) through its
“Volume at Price” function).
(iv) “ Common Stock ” means (i) the Company’s common stock, no par
value per share, and (ii) any capital stock into which such Common Stock shall have been changed or any capital
stock resulting from a reclassification of such Common Stock.
(v) “ Excluded Securities ” means, provided such security is issued at a
price which is greater than or equal to the arithmetic average of the Closing Bid Prices of the Common Stock for
the ten (10) consecutive trading days immediately preceding the date of issuance, any of the following: (a) any
issuance by the Company of securities in connection with a strategic partnership or a joint venture (the primary
purpose of which is not to raise equity capital), (b) any issuance by the Company of securities as consideration
for a merger or consolidation or the acquisition of a business, product, license, or other assets of another person
or entity, (c) any shares of capital stock or other securities exercisable for or convertible into shares of capital
stock pursuant to a commitment arising on or prior to the date hereof and (d) options to purchase shares of
Common Stock, provided (I) such options are issued after the date of this Warrant to employees of the
Company within thirty (30) days of such employee’s starting his employment with the Company, and (II) the
exercise price of such options is not less than the Closing Bid Price of the Common Stock on the date of issuance
of such option.
(vi) “ Expiration Date ” means June 23, 2010 or, if such date falls on a
Saturday, Sunday or other day on which banks are required or authorized to be closed in the City of New York
or the State of New York or on which trading does not take place on the Principal Exchange or automated
quotation system on which the Common Stock is traded (a “ Holiday ”), the next date that is not a Holiday.
(vii) “ Issuance Date ” means June 23, 2005.
(viii) “ Options ” means any rights, warrants or options to subscribe for or
purchase Common Stock or Convertible Securities.
(ix) “ Other Securities ” means (i) those options and warrants of the
Company issued prior to, and outstanding on, the Issuance Date of this Warrant, (ii) the shares of Common
Stock issuable on exercise of such options and warrants, provided such options and warrants are not amended
after the Issuance Date of this Warrant and (iii) the shares of Common Stock issuable upon exercise of this
Warrant.
(x) “ Person ” means an individual, a limited liability company, a
partnership, a joint venture, a corporation, a trust, an unincorporated organization and a government or any
department or agency thereof.
(xi) “ Principal Market ” means the New York Stock Exchange, the
American Stock Exchange, the Nasdaq National Market, the Nasdaq SmallCap Market, whichever is at the time
the principal trading exchange or market for such security, or the over-the-counter market on the electronic
bulletin board for such security as reported by Bloomberg or, if no bid or sale information is reported for such
security by Bloomberg, then the average of the bid prices of each of the market makers for such security as
reported in the “pink sheets” by the National Quotation Bureau, Inc.
(xii) “ Registration Rights ” the shares of the Company’s Common Stock
underlying this warrant shall have “piggy-back” and demand registration rights.
(xiii) “ Securities Act ” means the Securities Act of 1933, as amended.
(xiv) “ Warrant ” means this Warrant and all Warrants issued in exchange,
transfer or replacement thereof.
(xv) “ Warrant Exercise Price ” shall be Sixteen Cents ($0.16) or as
subsequently adjusted as provided in Section 8 hereof.
(xvi) “ Warrant Shares ” means the shares of Common Stock issuable at
any time upon exercise of this Warrant.
(c) Other Definitional Provisions.
(i) Except as otherwise specified herein, all references herein (A) to the
Company shall be deemed to include the Company’s successors and (B) to any applicable law defined or
referred to herein shall be deemed references to such applicable law as the same may have been or may be
amended or supplemented from time to time.
(ii) When used in this Warrant, the words “ herein ”, “ hereof ”, and “
hereunder ” and words of similar import, shall refer to this Warrant as a whole and not to any provision of this
Warrant, and the words “ Section ”, “ Schedule ”, and “ Exhibit ” shall refer to Sections of, and Schedules and
Exhibits to, this Warrant unless otherwise specified.
(iii) Whenever the context so requires, the neuter gender includes the
masculine or feminine, and the singular number includes the plural, and vice versa.
Section 2. Exercise of Warrant . Subject to the terms and conditions hereof, this
Warrant may be exercised by the holder hereof then registered on the books of the Company, pro rata as
hereinafter provided, at any time on any Business Day on or after the opening of business on such Business Day,
commencing with the first day after the date hereof, and prior to 11:59 P.M. Eastern Time on the Expiration
Date, by (i) delivery of a written notice, in the form of the subscription notice attached as Exhibit A hereto (the “
Exercise Notice ”), of such holder’s election to exercise this Warrant, which notice shall specify the number of
Warrant Shares to be purchased, (ii) payment to the Company of an amount equal to the Warrant Exercise Price
(s) applicable to the Warrant Shares being purchased, multiplied by the number of Warrant Shares (at the
applicable Warrant Exercise Price) as to which this Warrant is being exercised (plus any applicable issue or
transfer taxes) (the “ Aggregate Exercise Price ”) in cash or wire transfer of immediately available funds and (iii)
the surrender of this Warrant (or an indemnification undertaking with respect to this Warrant in the case of its
loss, theft or destruction) to a common carrier for overnight delivery to the Company as soon as practicable
following such date. In the event of any exercise of the rights represented by this Warrant in compliance with this
Section 2(a), the Company shall on the fifth (5th) Business Day following the date of receipt of the Exercise
Notice, the Aggregate Exercise Price and this Warrant (or an indemnification undertaking with respect to this
Warrant in the case of its loss, theft or destruction) and the receipt of the representations of the holder specified in
Section 6 hereof, if requested by the Company (the “ Exercise Delivery Documents ”), and if the Common Stock
is DTC eligible credit such aggregate number of shares of Common Stock to which the holder shall be entitled to
the holder’s or its designee’s balance account with The Depository Trust Company; provided, however, if the
holder who submitted the Exercise Notice requested physical delivery of any or all of the Warrant Shares, or, if
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the Common Stock is not DTC eligible then the Company shall, on or before the fifth (5 ) Business Day
following receipt of the Exercise Delivery Documents, issue and surrender to a common carrier for overnight
delivery to the address specified in the Exercise Notice, a certificate, registered in the name of the holder, for the
number of shares of Common Stock to which the holder shall be entitled pursuant to such request. Upon
delivery of the Exercise Notice and Aggregate Exercise Price referred to in clause (ii) above the holder of this
Warrant shall be deemed for all corporate purposes to have become the holder of record of the Warrant Shares
with respect to which this Warrant has been exercised. In the case of a dispute as to the determination of the
Warrant Exercise Price, the Closing Bid Price or the arithmetic calculation of the Warrant Shares, the Company
shall promptly issue to the holder the number of Warrant Shares that is not disputed and shall submit the disputed
determinations or arithmetic calculations to the holder via facsimile within one (1) Business Day of receipt of the
holder’s Exercise Notice. If the holder and the Company are unable to agree upon the determination of the
Warrant Exercise Price or arithmetic calculation of the Warrant Shares within one (1) day of such disputed
determination or arithmetic calculation being submitted to the holder, then the Company shall immediately submit
via facsimile (i) the disputed determination of the Warrant Exercise Price or the Closing Bid Price to an
independent, reputable investment banking firm or (ii) the disputed arithmetic calculation of the Warrant Shares to
its independent, outside accountant. The Company shall cause the investment banking firm or the accountant, as
the case may be, to perform the determinations or calculations and notify the Company and the holder of the
results no later than forty-eight (48) hours from the time it receives the disputed determinations or
calculations. Such investment banking firm’s or accountant’s determination or calculation, as the case may be,
shall be deemed conclusive absent manifest error.
(a) Unless the rights represented by this Warrant shall have expired or shall have
been fully exercised, the Company shall, as soon as practicable and in no event later than five (5) Business Days
after any exercise and at its own expense, issue a new Warrant identical in all respects to this Warrant exercised
except it shall represent rights to purchase the number of Warrant Shares purchasable immediately prior to such
exercise under this Warrant exercised, less the number of Warrant Shares with respect to which such Warrant is
exercised.
(b) No fractional Warrant Shares are to be issued upon any pro rata exercise of
this Warrant, but rather the number of Warrant Shares issued upon such exercise of this Warrant shall be
rounded up or down to the nearest whole number.
(c) If the Company or its Transfer Agent shall fail for any reason or for no reason
to issue to the holder within ten (10) days of receipt of the Exercise Delivery Documents, a certificate for the
number of Warrant Shares to which the holder is entitled or to credit the holder’s balance account with The
Depository Trust Company for such number of Warrant Shares to which the holder is entitled upon the holder’s
exercise of this Warrant, the Company shall, in addition to any other remedies under this Warrant or the
Placement Agent Agreement or otherwise available to such holder, pay as additional damages in cash to such
holder on each day the issuance of such certificate for Warrant Shares is not timely effected an amount equal to
0.025% of the product of (A) the sum of the number of Warrant Shares not issued to the holder on a timely basis
and to which the holder is entitled, and (B) the Closing Bid Price of the Common Stock for the trading day
immediately preceding the last possible date which the Company could have issued such Common Stock to the
holder without violating this Section 2.
(d) If within ten (10) days after the Company’s receipt of the Exercise Delivery
Documents, the Company fails to deliver a new Warrant to the holder for the number of Warrant Shares to which
such holder is entitled pursuant to Section 2 hereof, then, in addition to any other available remedies under this
Warrant or the Placement Agent Agreement, or otherwise available to such holder, the Company shall pay as
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additional damages in cash to such holder on each day after such tenth (10 ) day that such delivery of such new
Warrant is not timely effected in an amount equal to 0.25% of the product of (A) the number of Warrant Shares
represented by the portion of this Warrant which is not being exercised and (B) the Closing Bid Price of the
Common Stock for the trading day immediately preceding the last possible date which the Company could have
issued such Warrant to the holder without violating this Section 2.
Section 3. Covenants as to Common Stock . The Company hereby covenants and
agrees as follows:
(a) This Warrant is, and any Warrants issued in substitution for or replacement of
this Warrant will upon issuance be, duly authorized and validly issued.
(b) All Warrant Shares which may be issued upon the exercise of the rights
represented by this Warrant will, upon issuance, be validly issued, fully paid and nonassessable and free from all
taxes, liens and charges with respect to the issue thereof.
(c) During the period within which the rights represented by this Warrant may be
exercised, the Company will at all times have authorized and reserved at least one hundred percent (100%) of the
number of shares of Common Stock needed to provide for the exercise of the rights then represented by this
Warrant and the par value of said shares will at all times be less than or equal to the applicable Warrant Exercise
Price. If at any time the Company does not have a sufficient number of shares of Common Stock authorized and
available, then the Company shall call and hold a special meeting of its stockholders within thirty (30) days of that
time for the sole purpose of increasing the number of authorized shares of Common Stock.
(d) If at any time after the date hereof the Company shall file a registration
statement, the Company shall include the Warrant Shares issuable to the holder, pursuant to the terms of this
Warrant and shall maintain, so long as any other shares of Common Stock shall be so listed, such listing of all
Warrant Shares from time to time issuable upon the exercise of this Warrant; and the Company shall so list on
each national securities exchange or automated quotation system, as the case may be, and shall maintain such
listing of, any other shares of capital stock of the Company issuable upon the exercise of this Warrant if and so
long as any shares of the same class shall be listed on such national securities exchange or automated quotation
system.
(e) The Company will not, by amendment of its Articles of Incorporation or
through any reorganization, transfer of assets, consolidation, merger, dissolution, issue or sale of securities, or any
other voluntary action, avoid or seek to avoid the observance or performance of any of the terms to be observed
or performed by it hereunder, but will at all times in good faith assist in the carrying out of all the provisions of this
Warrant and in the taking of all such action as may reasonably be requested by the holder of this Warrant in
order to protect the exercise privilege of the holder of this Warrant against dilution or other impairment, consistent
with the tenor and purpose of this Warrant. The Company will not increase the par value of any shares of
Common Stock receivable upon the exercise of this Warrant above the Warrant Exercise Price then in effect,
and (ii) will take all such actions as may be necessary or appropriate in order that the Company may validly and
legally issue fully paid and nonassessable shares of Common Stock upon the exercise of this Warrant.
(f) This Warrant will be binding upon any entity succeeding to the Company by
merger, consolidation or acquisition of all or substantially all of the Company’s assets.
Section 4. Taxes . The Company shall pay any and all taxes, except any applicable
withholding, which may be payable with respect to the issuance and delivery of Warrant Shares upon exercise of
this Warrant.
Section 5. Warrant Holder Not Deemed a Stockholder . Except as otherwise
specifically provided herein, no holder, as such, of this Warrant shall be entitled to vote or receive dividends or
be deemed the holder of shares of capital stock of the Company for any purpose, nor shall anything contained in
this Warrant be construed to confer upon the holder hereof, as such, any of the rights of a stockholder of the
Company or any right to vote, give or withhold consent to any corporate action (whether any reorganization,
issue of stock, reclassification of stock, consolidation, merger, conveyance or otherwise), receive notice of
meetings, receive dividends or subscription rights, or otherwise, prior to the issuance to the holder of this Warrant
of the Warrant Shares which he or she is then entitled to receive upon the due exercise of this Warrant. In
addition, nothing contained in this Warrant shall be construed as imposing any liabilities on such holder to
purchase any securities (upon exercise of this Warrant or otherwise) or as a stockholder of the Company,
whether such liabilities are asserted by the Company or by creditors of the Company. Notwithstanding this
Section 5, the Company will provide the holder of this Warrant with copies of the same notices and other
information given to the stockholders of the Company generally, contemporaneously with the giving thereof to the
stockholders.
Section 6. Representations of Holder . The holder of this Warrant, by the
acceptance hereof, represents that it is acquiring this Warrant and the Warrant Shares for its own account for
investment only and not with a view towards, or for resale in connection with, the public sale or distribution of this
Warrant or the Warrant Shares, except pursuant to sales registered or exempted under the Securities Act;
provided, however, that by making the representations herein, the holder does not agree to hold this Warrant or
any of the Warrant Shares for any minimum or other specific term and reserves the right to dispose of this
Warrant and the Warrant Shares at any time in accordance with or pursuant to a registration statement or an
exemption under the Securities Act. The holder of this Warrant further represents, by acceptance hereof, that, as
of this date, such holder is an “accredited investor” as such term is defined in Rule 501(a)(1) of Regulation D
promulgated by the Securities and Exchange Commission under the Securities Act (an “ Accredited Investor
”). Upon exercise of this Warrant the holder shall, if requested by the Company, confirm in writing, in a form
satisfactory to the Company, that the Warrant Shares so purchased are being acquired solely for the holder’s
own account and not as a nominee for any other party, for investment, and not with a view toward distribution or
resale and that such holder is an Accredited Investor. If such holder cannot make such representations because
they would be factually incorrect, it shall be a condition to such holder’s exercise of this Warrant that the
Company receive such other representations as the Company considers reasonably necessary to assure the
Company that the issuance of its securities upon exercise of this Warrant shall not violate any United States or
state securities laws.
Section 7. Ownership and Transfer .
(a) The Company shall maintain at its principal executive offices (or such other
office or agency of the Company as it may designate by notice to the holder hereof), a register for this Warrant, in
which the Company shall record the name and address of the person in whose name this Warrant has been
issued, as well as the name and address of each transferee. The Company may treat the person in whose name
any Warrant is registered on the register as the owner and holder thereof for all purposes, notwithstanding any
notice to the contrary, but in all events recognizing any transfers made in accordance with the terms of this
Warrant.
Section 8. Adjustment of Warrant Exercise Price and Number of Shares . The
Warrant Exercise Price and the number of shares of Common Stock issuable upon exercise of this Warrant shall
be adjusted from time to time as follows:
(a) Adjustment of Warrant Exercise Price and Number of Shares upon Issuance of
Common Stock . If and whenever after the Issuance Date of this Warrant, the Company issues or sells, or is
deemed to have issued or sold, any shares of Common Stock (other than (i) Excluded Securities and (ii) shares
of Common Stock which are issued or deemed to have been issued by the Company in connection with an
Approved Stock Plan or upon exercise or conversion of the Other Securities) for a consideration per share less
than a price (the “ Applicable Price ”) equal to the Warrant Exercise Price in effect immediately prior to such
issuance or sale, then immediately after such issue or sale the Warrant Exercise Price then in effect shall be
reduced to an amount equal to such consideration per share. Upon each such adjustment of the Warrant
Exercise Price hereunder, the number of Warrant Shares issuable upon exercise of this Warrant shall be adjusted
to the number of shares determined by multiplying the Warrant Exercise Price in effect immediately prior to such
adjustment by the number of Warrant Shares issuable upon exercise of this Warrant immediately prior to such
adjustment and dividing the product thereof by the Warrant Exercise Price resulting from such adjustment.
(b) Effect on Warrant Exercise Price of Certain Events . For purposes of
determining the adjusted Warrant Exercise Price under Section 8(a) above, the following shall be applicable:
(i) Issuance of Options . Subject to Section (a) above, if after the date
hereof, the Company in any manner grants any Options and the lowest price per share for which one share of
Common Stock is issuable upon the exercise of any such Option or upon conversion or exchange of any
convertible securities issuable upon exercise of any such Option is less than the Applicable Price, then such share
of Common Stock shall be deemed to be outstanding and to have been issued and sold by the Company at the
time of the granting or sale of such Option for such price per share. For purposes of this Section 8(b)(i), the
lowest price per share for which one share of Common Stock is issuable upon exercise of such Options or upon
conversion or exchange of such Convertible Securities shall be equal to the sum of the lowest amounts of
consideration (if any) received or receivable by the Company with respect to any one share of Common Stock
upon the granting or sale of the Option, upon exercise of the Option or upon conversion or exchange of any
convertible security issuable upon exercise of such Option. No further adjustment of the Warrant Exercise Price
shall be made upon the actual issuance of such Common Stock or of such convertible securities upon the exercise
of such Options or upon the actual issuance of such Common Stock upon conversion or exchange of such
convertible securities.
(ii) Issuance of Convertible Securities . Subject to Section (a) above, if the
Company in any manner issues or sells any convertible securities and the lowest price per share for which one
share of Common Stock is issuable upon the conversion or exchange thereof is less than the Applicable Price,
then such share of Common Stock shall be deemed to be outstanding and to have been issued and sold by the
Company at the time of the issuance or sale of such convertible securities for such price per share. For the
purposes of this Section 8(b)(ii), the lowest price per share for which one share of Common Stock is issuable
upon such conversion or exchange shall be equal to the sum of the lowest amounts of consideration (if any)
received or receivable by the Company with respect to one share of Common Stock upon the issuance or sale of
the convertible security and upon conversion or exchange of such convertible security. No further adjustment of
the Warrant Exercise Price shall be made upon the actual issuance of such Common Stock upon conversion or
exchange of such convertible securities, and if any such issue or sale of such convertible securities is made upon
exercise of any Options for which adjustment of the Warrant Exercise Price had been or are to be made pursuant
to other provisions of this Section 8(b), no further adjustment of the Warrant Exercise Price shall be made by
reason of such issue or sale.
(iii) Change in Option Price or Rate of Conversion. If the purchase price
provided for in any Options, the additional consideration, if any, payable upon the issue, conversion or exchange
of any convertible securities, or the rate at which any convertible securities are convertible into or exchangeable
for Common Stock changes at any time, the Warrant Exercise Price in effect at the time of such change shall be
adjusted to the Warrant Exercise Price which would have been in effect at such time had such Options or
convertible securities provided for such changed purchase price, additional consideration or changed conversion
rate, as the case may be, at the time initially granted, issued or sold and the number of Warrant Shares issuable
upon exercise of this Warrant shall be correspondingly readjusted. For purposes of this Section 8(b)(iii), if the
terms of any Option or convertible security that was outstanding as of the Issuance Date of this Warrant are
changed in the manner described in the immediately preceding sentence, then such Option or convertible security
and the Common Stock deemed issuable upon exercise, conversion or exchange thereof shall be deemed to have
been issued as of the date of such change. No adjustment pursuant to this Section 8(b) shall be made if such
adjustment would result in an increase of the Warrant Exercise Price then in effect.
(c) Effect on Warrant Exercise Price of Certain Events . For purposes of
determining the adjusted Warrant Exercise Price under Sections 8(a) and 8(b), the following shall be applicable:
(i) Calculation of Consideration Received . If any Common Stock,
Options or convertible securities are issued or sold or deemed to have been issued or sold for cash, the
consideration received therefore will be deemed to be the net amount received by the Company therefore. If any
Common Stock, Options or convertible securities are issued or sold for a consideration other than cash, the
amount of such consideration received by the Company will be the fair value of such consideration, except where
such consideration consists of marketable securities, in which case the amount of consideration received by the
Company will be the market price of such securities on the date of receipt of such securities. If any Common
Stock, Options or convertible securities are issued to the owners of the non-surviving entity in connection with
any merger in which the Company is the surviving entity, the amount of consideration therefore will be deemed to
be the fair value of such portion of the net assets and business of the non-surviving entity as is attributable to such
Common Stock, Options or convertible securities, as the case may be. The fair value of any consideration other
than cash or securities will be determined jointly by the Company and the holders of Warrants representing at
least two-thirds (b) of the Warrant Shares issuable upon exercise of the Warrants then outstanding. If such
parties are unable to reach agreement within ten (10) days after the occurrence of an event requiring valuation
(the “ Valuation Event ”), the fair value of such consideration will be determined within five (5) Business Days
th
after the tenth (10 ) day following the Valuation Event by an independent, reputable appraiser jointly selected
by the Company and the holders of Warrants representing at least two-thirds (b) of the Warrant Shares issuable
upon exercise of the Warrants then outstanding. The determination of such appraiser shall be final and binding
upon all parties and the fees and expenses of such appraiser shall be borne jointly by the Company and the
holders of Warrants.
(ii) Integrated Transactions . In case any Option is issued in connection
with the issue or sale of other securities of the Company, together comprising one integrated transaction in which
no specific consideration is allocated to such Options by the parties thereto, the Options will be deemed to have
been issued for a consideration of $.01.
(iii) Treasury Shares . The number of shares of Common Stock
outstanding at any given time does not include shares owned or held by or for the account of the Company, and
the disposition of any shares so owned or held will be considered an issue or sale of Common Stock.
(iv) Record Date . If the Company takes a record of the holders of
Common Stock for the purpose of entitling them (1) to receive a dividend or other distribution payable in
Common Stock, Options or in convertible securities or (2) to subscribe for or purchase Common Stock, Options
or convertible securities, then such record date will be deemed to be the date of the issue or sale of the shares of
Common Stock deemed to have been issued or sold upon the declaration of such dividend or the making of such
other distribution or the date of the granting of such right of subscription or purchase, as the case may be.
(d) Adjustment of Warrant Exercise Price upon Subdivision or Combination of
Common Stock . If the Company at any time after the date of issuance of this Warrant subdivides (by any stock
split, stock dividend, recapitalization or otherwise) one or more classes of its outstanding shares of Common
Stock into a greater number of shares, any Warrant Exercise Price in effect immediately prior to such subdivision
will be proportionately reduced and the number of shares of Common Stock obtainable upon exercise of this
Warrant will be proportionately increased. If the Company at any time after the date of issuance of this Warrant
combines (by combination, reverse stock split or otherwise) one or more classes of its outstanding shares of
Common Stock into a smaller number of shares, any Warrant Exercise Price in effect immediately prior to such
combination will be proportionately increased and the number of Warrant Shares issuable upon exercise of this
Warrant will be proportionately decreased. Any adjustment under this Section 8(d) shall become effective at the
close of business on the date the subdivision or combination becomes effective.
(e) Distribution of Assets . If the Company shall declare or make any dividend or
other distribution of its assets (or rights to acquire its assets) to holders of Common Stock, by way of return of
capital or otherwise (including, without limitation, any distribution of cash, stock or other securities, property or
options by way of a dividend, spin off, reclassification, corporate rearrangement or other similar transaction) (a “
Distribution ”), at any time after the issuance of this Warrant, then, in each such case:
(i) any Warrant Exercise Price in effect immediately prior to the close of
business on the record date fixed for the determination of holders of Common Stock entitled to receive the
Distribution shall be reduced, effective as of the close of business on such record date, to a price determined by
multiplying such Warrant Exercise Price by a fraction of which (A) the numerator shall be the Closing Sale Price
of the Common Stock on the trading day immediately preceding such record date minus the value of the
Distribution (as determined in good faith by the Company’s Board of Directors) applicable to one share of
Common Stock, and (B) the denominator shall be the Closing Sale Price of the Common Stock on the trading
day immediately preceding such record date; and
(ii) either (A) the number of Warrant Shares obtainable upon exercise of
this Warrant shall be increased to a number of shares equal to the number of shares of Common Stock
obtainable immediately prior to the close of business on the record date fixed for the determination of holders of
Common Stock entitled to receive the Distribution multiplied by the reciprocal of the fraction set forth in the
immediately preceding clause (i), or (B) in the event that the Distribution is of common stock of a company
whose common stock is traded on a national securities exchange or a national automated quotation system, then
the holder of this Warrant shall receive an additional warrant to purchase Common Stock, the terms of which
shall be identical to those of this Warrant, except that such warrant shall be exercisable into the amount of the
assets that would have been payable to the holder of this Warrant pursuant to the Distribution had the holder
exercised this Warrant immediately prior to such record date and with an exercise price equal to the amount by
which the exercise price of this Warrant was decreased with respect to the Distribution pursuant to the terms of
the immediately preceding clause (i).
(f) Certain Events . If any event occurs of the type contemplated by the provisions
of this Section 8 but not expressly provided for by such provisions (including, without limitation, the granting of
stock appreciation rights, phantom stock rights or other rights with equity features), then the Company’s Board of
Directors will make an appropriate adjustment in the Warrant Exercise Price and the number of shares of
Common Stock obtainable upon exercise of this Warrant so as to protect the rights of the holders of the
Warrants; provided, except as set forth in section 8(d),that no such adjustment pursuant to this Section 8(f) will
increase the Warrant Exercise Price or decrease the number of shares of Common Stock obtainable as otherwise
determined pursuant to this Section 8.
(g) Notices .
(i) Immediately upon any adjustment of the Warrant Exercise Price, the
Company will give written notice thereof to the holder of this Warrant, setting forth in reasonable detail, and
certifying, the calculation of such adjustment.
(ii) The Company will give written notice to the holder of this Warrant at
least ten (10) days prior to the date on which the Company closes its books or takes a record (A) with respect
to any dividend or distribution upon the Common Stock, (B) with respect to any pro rata subscription offer to
holders of Common Stock or (C) for determining rights to vote with respect to any Organic Change (as defined
below), dissolution or liquidation, provided that such information shall be made known to the public prior to or in
conjunction with such notice being provided to such holder.
(iii) The Company will also give written notice to the holder of this Warrant
at least ten (10) days prior to the date on which any Organic Change, dissolution or liquidation will take place,
provided that such information shall be made known to the public prior to or in conjunction with such notice being
provided to such holder.
Section 9. Purchase Rights; Reorganization, Reclassification, Consolidation,
Merger or Sale .
(a) In addition to any adjustments pursuant to Section 8 above, if at any time the
Company grants, issues or sells any Options, Convertible Securities or rights to purchase stock, warrants,
securities or other property pro rata to the record holders of any class of Common Stock (the “ Purchase Rights
”), then the holder of this Warrant will be entitled to acquire, upon the terms applicable to such Purchase Rights,
the aggregate Purchase Rights which such holder could have acquired if such holder had held the number of
shares of Common Stock acquirable upon complete exercise of this Warrant immediately before the date on
which a record is taken for the grant, issuance or sale of such Purchase Rights, or, if no such record is taken, the
date as of which the record holders of Common Stock are to be determined for the grant, issue or sale of such
Purchase Rights.
(b) Any recapitalization, reorganization, reclassification, consolidation, merger, sale
of all or substantially all of the Company’s assets to another Person or other transaction in each case which is
effected in such a way that holders of Common Stock are entitled to receive (either directly or upon subsequent
liquidation) stock, securities or assets with respect to or in exchange for Common Stock is referred to herein as
an “ Organic Change .” Prior to the consummation of any (i) sale of all or substantially all of the Company’s
assets to an acquiring Person or (ii) other Organic Change following which the Company is not a surviving entity,
the Company will secure from the Person purchasing such assets or the successor resulting from such Organic
Change (in each case, the “ Acquiring Entity ”) a written agreement (in form and substance satisfactory to the
holders of Warrants representing at least two-thirds (iii) of the Warrant Shares issuable upon exercise of the
Warrants then outstanding) to deliver to each holder of Warrants in exchange for such Warrants, a security of the
Acquiring Entity evidenced by a written instrument substantially similar in form and substance to this Warrant and
satisfactory to the holders of the Warrants (including an adjusted warrant exercise price equal to the value for the
Common Stock reflected by the terms of such consolidation, merger or sale, and exercisable for a corresponding
number of shares of Common Stock acquirable and receivable upon exercise of the Warrants without regard to
any limitations on exercise, if the value so reflected is less than any Applicable Warrant Exercise Price
immediately prior to such consolidation, merger or sale). Prior to the consummation of any other Organic
Change, the Company shall make appropriate provision (in form and substance satisfactory to the holders of
Warrants representing a majority of the Warrant Shares issuable upon exercise of the Warrants then
outstanding) to insure that each of the holders of the Warrants will thereafter have the right to acquire and receive
in lieu of or in addition to (as the case may be) the Warrant Shares immediately theretofore issuable and
receivable upon the exercise of such holder’s Warrants (without regard to any limitations on exercise), such
shares of stock, securities or assets that would have been issued or payable in such Organic Change with respect
to or in exchange for the number of Warrant Shares which would have been issuable and receivable upon the
exercise of such holder’s Warrant as of the date of such Organic Change (without taking into account any
limitations or restrictions on the exercisability of this Warrant).
Section 10. Lost, Stolen, Mutilated or Destroyed Warrant . If this Warrant is lost,
stolen, mutilated or destroyed, the Company shall promptly, on receipt of an indemnification undertaking (or, in
the case of a mutilated Warrant, the Warrant), issue a new Warrant of like denomination and tenor as this
Warrant so lost, stolen, mutilated or destroyed.
Section 11. Notice . Any notices, consents, waivers or other communications
required or permitted to be given under the terms of this Warrant must be in writing and will be deemed to have
been delivered: (i) upon receipt, when delivered personally; (ii) upon receipt, when sent by facsimile (provided
confirmation of receipt is received by the sending party transmission is mechanically or electronically generated
and kept on file by the sending party); or (iii) one Business Day after deposit with a nationally recognized
overnight delivery service, in each case properly addressed to the party to receive the same. The addresses and
facsimile numbers for such communications shall be:
If to Staraim: Staraim Enterprises Ltd.
Athalassas, 47
nd
2 Floor, Flat/Office 202
Strovolos, P.C. 2012, Nicosia, Cyprus
Attention:
Telephone:
Facsimile:
With Copy to: Finn Dixon & Herling, LLP
One Landmark Square, Suite 1400
Stamford, CT 06901
Attention:Charles J. Downey III, Esq.
Telephone: (203) 325-5000
Facsimile: (203) 348-5777
If to the Company, to: Smartire Systems Inc.
Richmond Corporate Centre
Suite 150-13151 Vanier Place
Richmond, British Columbia
Canada V6V 2J1
Attention: Jeff Finkelstein – Chief Financial Officer
Telephone: (604) 276-9884
With a copy to: Facsimile: (604) 276-2353
Greenberg Traurig, LLP
200 Park Avenue
New York, NY 10166
Attention: Michael L. Pflaum, Esq.
Telephone: (212) 801-9200
Facsimile: (212) 801-6400
If to a holder of this Warrant, to it at the address and facsimile number set forth on Exhibit C hereto, with copies
to such holder’s representatives as set forth on Exhibit C , or at such other address and facsimile as shall be
delivered to the Company upon the issuance or transfer of this Warrant. Each party shall provide five days’ prior
written notice to the other party of any change in address or facsimile number. Written confirmation of receipt
(A) given by the recipient of such notice, consent, facsimile, waiver or other communication, (or (B) provided by
a nationally recognized overnight delivery service shall be rebuttable evidence of personal service, receipt by
facsimile or receipt from a nationally recognized overnight delivery service in accordance with clause (i), (ii) or (iii)
above, respectively.
Section 12. Date . The date of this Warrant is set forth on page 1 hereof. This
Warrant, in all events, shall be wholly void and of no effect after the close of business on the Expiration Date,
except that notwithstanding any other provisions hereof, the provisions of Section 8(b) shall continue in full force
and effect after such date as to any Warrant Shares or other securities issued upon the exercise of this Warrant.
Section 13. Amendment and Waiver . Except as otherwise provided herein, the
provisions of the Warrants may be amended and the Company may take any action herein prohibited, or omit to
perform any act herein required to be performed by it, only if the Company has obtained the written consent of
the holders of Warrants representing at least two-thirds of the Warrant Shares issuable upon exercise of the
Warrants then outstanding; provided that, except for Section 8(d), no such action may increase the Warrant
Exercise Price or decrease the number of shares or class of stock obtainable upon exercise of any Warrant
without the written consent of the holder of such Warrant.
Section 14. Descriptive Headings; Governing Law . The descriptive headings of
the several sections and paragraphs of this Warrant are inserted for convenience only and do not constitute a part
of this Warrant. The corporate laws of the State of New Jersey shall govern all issues concerning the relative
rights of the Company and its stockholders. All other questions concerning the construction, validity,
enforcement and interpretation of this Agreement shall be governed by the internal laws of the State of New
Jersey, without giving effect to any choice of law or conflict of law provision or rule (whether of the State of New
Jersey or any other jurisdictions) that would cause the application of the laws of any jurisdictions other than the
State of New Jersey. Each party hereby irrevocably submits to the exclusive jurisdiction of the state and federal
courts sitting in Hudson County and the United States District Court for the District of New Jersey, for the
adjudication of any dispute hereunder or in connection herewith or therewith, or with any transaction
contemplated hereby or discussed herein, and hereby irrevocably waives, and agrees not to assert in any suit,
action or proceeding, any claim that it is not personally subject to the jurisdiction of any such court, that such suit,
action or proceeding is brought in an inconvenient forum or that the venue of such suit, action or proceeding is
improper. Each party hereby irrevocably waives personal service of process and consents to process being
served in any such suit, action or proceeding by mailing a copy thereof to such party at the address for such
notices to it under this Agreement and agrees that such service shall constitute good and sufficient service of
process and notice thereof. Nothing contained herein shall be deemed to limit in any way any right to serve
process in any manner permitted by law.
Section 15. Waiver of Jury Trial . AS A MATERIAL INDUCEMENT FOR
EACH PARTY HERETO TO ENTER INTO THIS WARRANT, THE PARTIES HERETO HEREBY
WAIVE ANY RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING RELATED IN ANY
WAY TO THIS WARRANT AND/OR ANY AND ALL OF THE OTHER DOCUMENTS
ASSOCIATED WITH THIS TRANSACTION.
IN WITNESS WHEREOF , the Company has caused this Warrant to be signed as of the date first set
forth above.
SMARTIRE SYSTEMS INC.
By: /s/ Jeff Finkelstein
Name: Jeff Finkelstein
Title: Chief Financial Officer
EXHIBIT A TO WARRANT
EXERCISE NOTICE
TO BE EXECUTED
BY THE REGISTERED HOLDER TO EXERCISE THIS WARRANT
SMARTIRE SYSTEMS INC.
The undersigned holder hereby exercises the right to purchase ______________ of the shares of
Common Stock (“ Warrant Shares ”) of Smartire Systems Inc., a corporation organized and existing under the
laws of the Yukon Territory (the “ Company ”) , evidenced by the attached Warrant (the “ Warrant
”). Capitalized terms used herein and not otherwise defined shall have the respective meanings set forth in the
Warrant.
1. Form of Warrant Exercise Price . The Holder intends that payment of the Warrant Exercise
Price shall be made as a “ Cash Exercise ” with respect to ______________ Warrant Shares.
2. Payment of Warrant Exercise Price . The holder shall pay the sum of $______________ to
the Company in accordance with the terms of the Warrant.
3. Delivery of Warrant Shares . The Company shall deliver to the holder _________ Warrant
Shares in accordance with the terms of the Warrant.
Date: _______________ __, ______
Name of Registered Holder
By:
Name:
Title:
EXHIBIT B TO WARRANT
FORM OF WARRANT POWER
FOR VALUE RECEIVED, the undersigned does hereby assign and transfer to ________________,
Federal Identification No. __________, a warrant to purchase ____________ shares of the capital stock of
Smartire Systems Inc., a corporation organized and existing under the laws of the Yukon Territory, represented
by warrant certificate no. _____, standing in the name of the undersigned on the books of said corporation. The
undersigned does hereby irrevocably constitute and appoint ______________, attorney to transfer the warrants
of said corporation, with full power of substitution in the premises.
Dated:
By:
Name:
Title:
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